My understanding of welfare is payments to people with low incomes, or children they can't support. Some have said that by subsidizing this activity, we get more of it. Even FDR spoke of the "narcotic effect" of these types of payments. Some people know that the government will bail them out, and therefore will "slack off" on their own efforts.
Look at that last sentence again - does this apply to tax subsidies to corporations? Are these tax credits and other "breaks" tied to activities we want to encourage rather than discourage (like oil exploration and drilling, etc.), or are they not tied to anything?
Speaking more broadly, when (if ever) should the government use tax policy to encourage or discourage activity? If you tax it, you get less of it; if you subsidize it, you get more of it. The home mortgage interest deduction is probably the most commonly encountered "tax break" - although I'd hardly call it 'homeowner welfare."
What are your thoughts?
2007-01-24
04:11:10
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7 answers
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asked by
American citizen and taxpayer
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